Nondisclosure of Pending Sale of Business Did Not Invalidate Divorce Settlement

October 24, 2006 | Blog, Business Valuation, Divorce

Icon for author Brian Vertz Brian Vertz

A New York court dismissed a wife’s attempt to invalidate a divorce settlement which was reached while the business owner was simultaneously negotiating the sale of the company.

From the Family Law Prof Blog:

Wife argued that husband affirmatively misrepresented the liquidity of the company and the talks that were underway for purchase of the company. However, the court disagreed, finding that husband had disclosed the assets and that it was up to wife to inquire further. However, wife, who had been represented by counsel in negotiating the agreement, had acknowledged that she had the right to inquire further into the financial aspects but waived this right.

The court noted its “disdain for post-divorce claims of concealment” and found that “[T]he wife concedes, as she must, that the husband consistently and accurately disclosed the full extent of his minority interest in Capital IQ, an asset of speculative value at the time the settlement agreement was executed… That the wife now believes her husband privately harbored a more optimistic assessment of the potential value of his minority interest in that company, or even had additional information that he kept to himself, is irrelevant… wife has only herself to blame for her failure to inquire further. Such failure is not, however, a basis upon which to vacate the settlement.”

Kojovic v. Goldman (October 19, 2006)

This situation would seem much less likely had the wife engaged a BV professional before entering the settlement agreement. The court decision does not mention whether either party engaged experts.

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